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If the government really wanted to protect us from ourselves they would limit gambling, which costs poor people a lot and is known to result in unfavorable odds, and they would discontinue the lottery. Instead because the lottery and gambling make the government and big institutions money they are legal. Restricting pattern day trading is, likewise, an attempt to give those with money more leverage over those without money. This law directly discriminates against those without money and it was passed by those with money. The government has essentially passed two sets of laws, one for the rich and one for the poor.
These laws were undemocratically passed by the rich for the rich under the false pretense of protecting the poor. Such is a hallmark of an aristocracy. No nation should have a different set of laws for the rich than for the poor.
The entire Wikipedia article, especially all the criticisms, are worth reading.
FINRA (formerly National Association of Securities Dealers, Inc. or NASD) rule applies to any customer who buys and sells a particular security in the same trading day (day trades), and does this four or more times in any five consecutive business day period; the rule applies to margin accounts, but not to cash accounts. A pattern day trader is subject to special rules. The main rule is that in order to engage in pattern day trading you must maintain an equity balance of at least $25,000 in a margin account.
[...] The SEC believes that people whose account equity is less than $25,000 may represent less-sophisticated traders, who may be less able to handle the losses that may be associated with day trades.
(Score: 0) by Anonymous Coward on Monday May 15 2017, @05:37AM (16 children)
If I wanted to rip people off and lie to them, I'd have gotten in on the HFT scam.
(Score: 0) by Anonymous Coward on Monday May 15 2017, @06:18AM (15 children)
I wish you would get into HFT, because I have a feeling that as a non-HFT trader I could make a lot of money off of your clueless bumbling.
(Score: 0) by Anonymous Coward on Monday May 15 2017, @07:14AM (14 children)
Your feelings can't trump the ability to front-run others' trades, or fraudulently shift prices by ramming/cancelling millions of trades you have no intention of honoring in violation of law.
Someone shilling this hard for the High Frequency Trading fraud is almost certainly profiting from the scam.
(Score: 1) by khallow on Monday May 15 2017, @09:23AM (13 children)
Your feelings can't trump the ability to front-run others' trades, or fraudulently shift prices by ramming/cancelling millions of trades you have no intention of honoring in violation of law.
HFT can't front-run. They don't have the inside knowledge to do that. And it's not fraud when the bids (not trades) are honored when they are purchased.
Someone shilling this hard for the High Frequency Trading fraud is almost certainly profiting from the scam.
Or maybe he just really hates ignorance?
(Score: 0) by Anonymous Coward on Monday May 15 2017, @09:29AM (12 children)
The data shows that High Frequency Trading is used to front-run. [nanex.net]
How much did your HFTing scam net you this week?
(Score: 1) by khallow on Monday May 15 2017, @09:55AM (11 children)
(Score: 0) by Anonymous Coward on Monday May 15 2017, @09:59AM (10 children)
That bloody knife with my fingerprints all over it in the back of my dead landlord is no evidence that I murdered her!
Placing trades I have no intention of honoring is not violation of law against bad-faith trades because far fewer than 3.2% of my trades get sniped by other HFTers!
(Score: 1) by khallow on Monday May 15 2017, @11:57AM (9 children)
Placing trades I have no intention of honoring is not violation of law against bad-faith trades because far fewer than 3.2% of my trades get sniped by other HFTers!
It doesn't matter if it's 0.01%. It's still a contract that still gets honored when someone gets it.
(Score: 0) by Anonymous Coward on Monday May 15 2017, @05:26PM (8 children)
The term for offering an initial price and then changing the price to your advantage after someone tries to transact at that initial price is "bait and switch", a form of fraud.
(Score: 0) by Anonymous Coward on Monday May 15 2017, @05:52PM (7 children)
Except that really is not what HFT is -- you can't really bait-and-switch, even with HFT, because the other guy might be faster or because some big institutional player might happen to be taking the opposing side right when you try the bait-and-switch. You might as well play paddy-cake with an alligator, because at some point you will probably be eaten alive. That kind of spoofing is highly dangerous and not very common.
Furthermore, (and as has been repeated zillions of times in this thread) you are talking about single-tic moves, both up AND down, that only affect other HFTs and the big boys. Mom/pop feel no pain from such moves, spoofing or not.
(Score: 0) by Anonymous Coward on Monday May 15 2017, @06:09PM (6 children)
You're attempting the equivalent of claiming that stealing isn't possible, because some other thief might be faster at stealing.
(Score: 1) by khallow on Tuesday May 16 2017, @01:36AM (5 children)
(Score: 0) by Anonymous Coward on Tuesday May 16 2017, @01:55AM (4 children)
What you're trying to do is called "gaslighting". It's when the would-be manipulator (that's you) attempts to repeatedly deny obvious reality in an attempt to make others doubt their own faculties. It's also involves blatant lying. I can see how you're a good fit for theft-by-HFT advocacy.
(Score: 1) by khallow on Tuesday May 16 2017, @03:11AM (3 children)
The detractors of HFT have had plenty of opportunity to show harm from HFT and they've failed to date. You can call it "gaslighting". I call it "reason". Maybe you should try it sometime?
(Score: 0) by Anonymous Coward on Tuesday May 16 2017, @03:47AM (2 children)
It is not possible to reason with someone who is committed to blatantly lying in an attempt to cover up crimes. Evidence is presented, and the criminals (along with supporters like you) can protest until you turn blue in the face that nuuu, it was leeegal, it wasn't fraud or theft! when in fact you're just another in a long line of white-collar criminals trying to lie your way out of being caught.
(Score: 1) by khallow on Tuesday May 16 2017, @06:20AM (1 child)
It is not possible to reason with someone who is committed to blatantly lying in an attempt to cover up crimes.
Wow, I'm so convinced of the truth of your words now. You just say shit. This is the behavior of a child.
I'll summarize this cluster of threads for anyone who has endured to this point. I asked for evidence of harm [soylentnews.org]. Despite somewhere around 150 posts to date, no one has bothered to produce such evidence. What they have provided is peculiar.
For example, there's the common example of the trader who placed a 25,000 share order across multiple markets and had only part of it complete, due to impressively fast HFT reactions which pulled bids before the original order could arrive at later markets. Somehow that is supposed to be an example of "theft" even though the AC who keeps bringing up this example never points to anything actually stolen. Further, it is supposed to be an example of front-running. But as I noted in my analysis [soylentnews.org] of this event, the fact of the trade in question was public knowledge and hence, by definition of front-running, not front-running.
Another example is "spoofing" or the placement of bids and then their near immediate removal in order to confound computer trading programs. I stumbled across a study [soylentnews.org] that indicates spoofing is currently not that prevalent (they looked for "cancellation clusters" which would be necessary in order to spoof - you can't spoof, if your order sticks around for anyone to claim). Instead, they found most cancellations of this sort were price discovery strategies. Given the flaky nature of quoting (requesting bid/price data from the market in real time) which has lagged actual trading on occasion, this sort of price discovery seems a sound strategy when one is in a huge burst of market activity. But our Mr. AC refuses to acknowledge that spoofing isn't as common as he alleges.
But the peculiarly rarity of spoofing has been explained by another AC poster as poking an alligator. Namely, when one HFT trader exists, then spoofing is near risk free. But when there are many out there, then the spoofing strategy can be gamed by anyone else who is aware of it and willing to snap up all those short term bids. And since the spoofer is trying to present a misleading quote to slower traders, they are by necessity trading away from the market price and hence, creating a profitable opportunity for any other HFT to exploit. Basic issues like that appear to be completely misunderstood by our AC crusader.
The AC repeatedly asserts that HFT is illegal even though it's legal. The AC repeated asserts that HFT is front-running even though it's not. The AC repeated asserts a variety of other things even though I or someone else has already shown the assertion to be false. Then when repeatedly confronted with the errors of these statements, the AC starts accusing everyone involved of being industry shills. This is mental illness (though probably of a mild sort) not some sort of advocacy.
If there's anything I want the persevering reader to take away from this is that this ultimately is about someone wanting to use the power of the state to prevent an unpopular group from doing something they don't understand. It's the classic nanny response. Rich, smarmy Wall Streeters trading big money stocks in millisecond or less time? Sounds dangerous even though the nanny doesn't have a clue what that means. Plus, we hate those guys. We oughta ban that. The accusations of theft and whatnot follow because this prohibition impulse needs to be justified after the fact. I think this impulse should be firmly resisted wherever it rears its ugly head. Even if the nannies can't be helped, we can at least keep the plague from spreading.
It's a recipe for ugly stagnation, if we halt every activity just because some nanny doesn't like it. My view on HFT is that it doesn't do any harm (despite the huffing and puffing to the contrary), it does perform some useful roles in markets such as providing liquidity for slower time scale computer traders, it provides a quick means to remove bad computer trading programs, and it spurs the self-funded development of some pretty cool tech and milli/micro second decision making theory. Against that, we have the fear that mom and pop are losing pennies on a trade (particularly myopic considering mom and pop are losing much more on the games that brokers legally play with their clients) or shedding tears over some Bostonian trader who can't buy all the stock that his quote shows (and then portraying it as theft!). That is utterly ridiculous.
My view is that if you can't show compelling evidence of harm, then the activity should be allowed completely unimpaired. We've had plenty of time to show that bad things would happen and failed. There is nothing else to say. It's supposed to be a free society. Let's start acting like it is.
(Score: 0) by Anonymous Coward on Tuesday May 16 2017, @06:41AM
Conversely, trading data shows HFTers manipulating their own orders with foreknowledge of other non-HFT market orders which have already been placed but not completed. [nanex.net] The justification used to attempt to excuse this naked frontrunning scam is that the HFTs change their orders within milliseconds, exploiting network delays that affect non-HFTers. The elapsed time involved in a frontrunning scam is irrelevant. The harm is done via theft of value to the non-HFT trader who placed an order for advertised shares which were yanked away by HFTers, in the same fashion as a meatspace bait-and-switch fraud.
The SEC fined the NYSE $5 million for similar violations (improperly providing trading data faster to some clients than others), and paid a $750,000 whistleblower bounty [marketwatch.com] to the same outfit as has been providing the linked evidence of theft and fraud by High Frequency Traders.